NOTIFICATION

2 March 2016 Editorial

2 MARCH 2016

The health net should cover all

The announcement in the Union Budget of an insurance scheme against catastrophic health expenditure for the weaker sections should become part of a calibrated plan to provide universal health coverage. When it comes to public health expenditure, India brings up the rear among even many developing countries. Budget 2016-17 takes the incremental step of introducing some insurance protection against high out-of-pocket expenditure that pushes families into poverty. In this context, the plan to provide access to dialysis for kidney failure at district hospitals through a dedicated national programme is an intervention that is overdue. Some States, such as Tamil Nadu, have insurance to pay for hospitalisation through a government-backed plan. As a scaled-up national programme, there is much to learn from the experience of countries such as Thailand and Japan. What stands out about them, as evident from a study conducted by the World Bank and the Japanese government, is the use of general revenues to augment payroll taxes in Thailand, and the firm capping of care costs through standardised benefits and standardised payments. Both aspects — viable funding to universalise access and tightly regulated costs to guard against profiteering — combined with a guarantee of quality care are important to India, where the health sector has grown amorphously in the absence of strong regulatory oversight.These learnings are critical to also avoid the moral hazard of unethical institutions gaining access to the Rs.1 lakh government-funded health insurance through unnecessary hospitalisation.

A nominal increase in the annual health budget, pegged at 9.5 per cent over 2015-16, and a growing role for profit- oriented care systems and private insurance can only retard India’s progress towards universal health coverage (UHC). There is evidence that a significant number of young Indians aged 23 to 35 are not buying health insurance since they find it expensive. This trend skews the risk pool towards older citizens who are more likely to seek care, leading to the familiar cycle of higher premiums and more claims. The answer clearly lies in moving towards UHC under a time-bound programme that covers everyone, using a combination of subscriber payments and tax funds, and strong controls over cost of care. There is a challenge also to scale up dialysis access. Besides equipping district hospitals with the necessary machines, training of medical professionals to closely monitor patients availing the service is vital. The national roster of nephrologists is only about 1,100 strong, while the incidence of renal failure is of the order of 2.2 lakh patients a year, as pointed out in the Budget speech. Creating the human resources needed has to be accorded top priority. The dialysis programme, laudable as it is, underscores the importance of preventing end-stage renal disease, and regular monitoring of kidney health at the population level. On the broader agenda, political parties and social movements can no longer ignore the imperative of providing quality health care to all.

Looking beyond economic quick-fixes

In an all-too-familiar replay, finance ministers and central bank governors of the Group of 20 countries meeting in Shanghai drove home the complexities of formulating a collective response to the persisting global slowdown in growth, even as the International Monetary Fund (IMF) reiterated its call for coordinated action at the multilateral level to contain risks to the real economies from market turbulence. The Fund’s prescription ahead of the gathering, as in the recent past, lays particular stress on fiscal stimulus measures to boost demand, as against over-reliance on monetary policies. But the reaction from national capitals was along expected lines. U.S. Treasury Secretary Jacob Lew pressed hard a long-standing concern of Washington that China ought to increase domestic consumption and Germany adopt fiscal stimulus. His counterpart in Berlin, Wolfgang Schaeuble, was equally categorical as he ruled out his country’s support for a fiscal stimulus and instead continued to insist on structural reforms as the remedy. Mr. Lew even suggested, ahead of the Shanghai meet, that it may be a case of financial markets misreading the situation on the state of the real economy.

Despite the strong divergence of perceptions that have long underpinned the group’s overall approach, their promise in Shanghai to refrain from a competitive devaluation of currencies to promote exports could go some way to soothe investor sentiment. Such an assurance is significant in the light of the 4 per cent depreciation in the value of the renminbi last year that set off turmoil in global stock markets and a flight of capital from the country. Currency volatilities could continue to pose concerns as emerging economies experienced a slowdown in 2015 — most notably Brazil, and China, which earlier this decade overtook the U.S. as the world’s largest trading nation. The economic recession in Brazil, the worst in over a century, and the combined effects of the collapse of Chinese imports into Latin America, could well have had a significant impact on world trade, which contracted to its lowest since the global financial crisis, according to the World Trade Monitor of the Netherlands Bureau for Economic Policy Analysis. Yet, there is good evidence of the G-20’s capacity for concerted action. In 2014, it pledged to take steps to raise the group’s gross domestic product by an additional 2 per cent by 2018. The measures implemented so far would cause an increase of just 0.8 per cent by that deadline. The current situation should lend greater urgency not merely to achieve the goal, but to extend the measures into other areas that have been identified for common action. The political engagement from the G-20 in the wake of the 2008 global meltdown was immense. That resulted in the fiscal stimulus, the stabilisation of the banking sector and the injection of capital into international financial institutions. The rich and emerging economies should summon the resolve and the will to promote a more equitable international order.